Morning Commentary for Tuesday, Jun 1, 2010

by Tom Nunamaker on June 1, 2010

E-mini S&P 500 1086.76 -1.75
EUR/USD 1.2237 -0.0087
30-Day Fed Funds 99.7825 +0.0025
Gold 1128.2 +13.5

Markets have recovered.  S&P E-mini futures were down 15 points a few hours ago.  The EURO hit a new four year low against the US Dollar (1.2110) but has paired some of that loss.  Gold is up nicely today.  The ISM Manufacturing Index report came out today and was favorable, encouraging traders to bid up the market.

A Pfennig for Your Thoughts

Chuck Butler, President of EverBank World Markets, writes a daily free commentary called “A Pfennig for Your Thoughts“.   Chuck’s writing style is humorous but covers topics pertaining to currencies (he’s a bank President after all) and the economy.  One interesting comment from today’s article was this:

“And a reader just sent me a story that appeared in Money.cnn.com .. it goes like this… ‘Think Greece and Spain are drowing in debt?  Look a little closers to home.  Seven U.S. cities recently had their municipal bonds downgraded below investment grade.  Their debt is now, junk, considered more worthless than that of the so-called PIIGS.'”

Chuck also references John Williams at www.shadowstats.com.  I personally subscribe to Shadow Stats as it has economic analysis you won’t find anywhere else.  John estimates true U.S. unemployment is at 22%, not current 9.7% the government estimates.

There’s no shortage of discouraging economic news.

Entry SHORT on the SPX Daily Chart??

Look at the S&P Daily chart.  This looks like a classic retracement setting up a nice short trade today.

SPX Daily Chart - Go Short here?

SPX Daily Chart - Go Short here?

The market does NOT look like it wants to go sideways anytime soon.  Income traders have to adjust and use extra longs to work this market.   Big swings are still possible imo.

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{ 2 comments… read them below or add one }

MikeS July 27, 2010 at 5:51 pm

What about using the new weekly options on SPY to write some slightly ITM covered calls?

Tom Nunamaker August 1, 2010 at 9:15 am

That’s an interesting idea Mike. Have you tested it? Do you have a summary of your results of doing this? Any pitfalls you’ve experienced??

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